Today I have Terry Schenck with me to explain all about VHDA loans and how they can help you as a first-time homebuyer.
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Terry Schenck of Prosperity Home Mortgage joined me recently for a discussion about VHDA loans, including what they are and how they may help first-time homebuyers.
VHDA loans, or Virginia Housing Development Authority loans, are set up for first-time homebuyers looking to submit a low down payment. According to Terry, this incredibly underutilized program actually has several options to make buying affordable.
The first option is an FHA loan which requires a 3.5% down payment. The VHDA loan is able to provide 2.5% of this down payment, leaving you responsible for only 1% down.
The next option works with a conventional loan. Here the VHDA loan provides a 2% grant for your down payment of 3% which means that, as the buyer, you only have to pay 1% down.
It's important to note that there are income restrictions, and it does vary by county. Terry says that he would be happy to go over your application to see if you qualify for that grant.
To make the VHDA loans even better, they recently added a 100% financing program for those that can't come up with the 1% down on their own. This new change applies to both the FHA and conventional loans.
"This is a great opportunity for people that think that they have to have a lot of down payment."
For the conventional loan, this would mean a 97% purchase price first loan, and a 3% second loan, while for an FHA loan it would cover 96.5% of the purchase price with a first loan and receive a 3.5% second loan. This is a great opportunity for people that think that they have to have a lot of down payment.
Oftentimes, people think that they should wait to buy and save up their 20% or 10% down payment. But this may not be a great idea since rates are unpredictable.
For example: Last year at this time, if someone put 3% down, they could have gotten a loan with a 4.375% interest rate. This year, though, a 30-year fixed loan now has a 4.625% interest rate even with a 20% down payment.
Although they are a great unknown, interest rates are expected to continue rising, so waiting to save 20% could backfire.
If you have any additional questions, or if you're interested in buying or selling, please feel free to reach out to me by phone or email. I look forward to speaking with you soon.